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Telecom sector disappointed with 18% GST rates

New Delhi, (IANS) The telecom industry, expressing its disappointment over the 18 per cent Goods and Services Tax (GST) rates, on Friday said it will further stress the already bleeding balance sheet of the sector and may negatively impact consumers.

"Telecom industry hails GST as an iconic reform but we are disappointed with announced rate of 18 per cent. We had submitted to the government that consideration must be given to the present financial condition of the sector and any rate beyond the existing rate of 15 per cent makes the telecom services more expensive for the consumer.

"It will augment the existing burden of the industry further. This is also likely to slowdown the planned rollout of infrastructure across the country and will have an impact on flagship government initiatives like Digital India, cashless India and others," said Rajan S Mathews, Director General, Cellular Operators' Association of India (COAI).

The GST Council concluded its two-day meeting in Srinagar on Friday when it agreed on a four-tax slab rate for services. IT, telecom and financial services will be taxed at the rate of 18 per cent, the Council decided.

"Imposing 18 per cent tax on telecom is likely to increase the overall tax burden and, therefore, may have a negative impact on the consumers' expenses. It needs to be appreciated that telecom is a necessity and an extremely important infrastructure service and resource and thus deserves more sensitive treatment," said Uday Pimprikar, Tax Partner, EY India.

"As an essential service, the telecom industry needs some benefits and tax relaxation in order to provide a seamless and hassle-free service. The industry has worked tirelessly and has fulfilled its motto of connecting everyone till the last mile connectivity," Mathews added.

Considering the massive impact of GST, the operators have already initiated the registration process involving migration to the GST regime, the COAI said.

However, the telecom industry body said clarity is still awaited on certain aspects of the published rules and the implementation is highly dependent on IT compatibility which requires sufficient time.

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